Having been an active observer of the off-trade through her company’s work with suppliers and symbol groups down through the years, FMI’s Managing Director Charley Stoney makes the interesting observation that many in the on-trade (and quite a few in the off-trade) don’t realise the complexity of this particular drinks sales channel. She explains the lie of the off-trade land from her unique perspective to Pat Nolan.
Mar 12 2013
Charley Stoney can take a long, lingering look at what many of us (with daily involvement in the off- and on-trade) fail to take the time to perceive.
For the Managing Director of one of Ireland’s foremost field and retail management companies, FMI, oversees the provision of a range of off-trade services to clients including sales and distribution drives, merchandising, POS placement, compliance monitoring, product launches, mystery shoppers, sampling and demonstrating services -- so knows this channel better than most.
Her work makes her ideally placed to have an informed overview of what one sees when one takes a closer look at today’s ‘off-trade’.
Firstly, there are three distinct channels for retailing alcohol, not just the on-trade and the off-trade, she informs me.
“These are the on-trade, the off-licences and the multiple grocery sectors, so you can’t talk about just two, you have to split out the multiple grocery sector as it’s such a different world.”
Specialist independents and chains form part of the off-trade while within the grocery sector the mixed trading outlets comprise small independents, symbol groups and then the forecourt convenience outlets for a whole different category of purchase, she explains, “Then there’s the multiple grocery and the discounters so really, there are seven different channels within the ‘off-trade’ that have to be treated differently”.
There again she views the multiple grocery outlet’s off-trade operation in much the same as any major food category there.
“If you go into Tesco or Dunnes you’re going there predominantly to shop for groceries; this is the core essence of what they stand for, but some have a really good off-licence.”
Within this off-trade sector the multiple must provide the consumer with a reason to go to the off-licence section.
“You have to treat it in the same way as the grocery section,” she explains, “You need to provide visual displays for a brand range. There’s a much more limited opportunity to hit the consumer over the head in a multiple’s off-trade environment as they’re busy scanning the shelves.”
Charley reckons that a supermarket can offer some 30 to 40 different varieties of beer so mainstream brands need as much standout on the shelf as possible to ensure that the consumer isn’t distracted by the competition.
“It’s so important to maintain a presence there so they go for big and visual, arresting and interesting Point Of Sale.
“But brands that provide a little bit of character within their display are also winning sales,” she adds.
On-trade beer range limited
She finds the appearance and success of niche beer brands in the Irish market interesting.
“Because of the way beer drinking started in Ireland, it has been centred around the pub, so the repertoire for beers is comparatively limited in the on-trade,” she claims.
To date, the on-trade has largely failed to address the “big thing” – bigger range, smaller price, she says.
“Pricing is one of the biggest issues for publicans,” she believes, “I think that the off-trade has given the consumer the opportunity to trial brands that previously would only have been available in the on-trade. This range extension is the biggest stumbling block for the on-trade.
“If you compare this to the UK on-trade which has a completely different structure, the repertoire for the on-trade there has possibly hundreds and thousands of brands where they have local niche providers. What’s happening is that the off-trade has brought those standards into the Irish market so the Irish market is developing a taste for niche beer brands and seeking them out in the off-trade because that’s where they’re being made available.
“Look at Lidl and Aldi; because they’re bringing in foreign brands at a good price, the consumer is being educated and being encouraged to educate their palate with different-tasting beers.
Wine range & the female market
One opportunity that seems to have been insufficiently dealt with in the on-trade is its wine repertoire.
It’s simply “shocking” how limited this is when compared to the off-trade, she claims.
“I understand that there are restraints but this is about the 30-plus female market. If pubs attracted more women via having a nice wine range then, generally speaking, you wouldn’t have men who want to go to the pub meeting with resistance in many cases from their partners who’d rather stay at home and open a nice bottle of wine.”
Established brands & social media
Nor does she underestimate the value of social media.
“I think the younger market is open to persuasion from niche brands. Advertising certainly plays a part but look at social media and word-of-mouth where niche brands play very well with younger consumers.
“Established brands don’t have any social media credibility,” she claims, “It’s more ‘push’ as opposed to ‘pull’ there whereas a unique beer brand from, say, Estonia, might suddenly end up with an extraordinary following because a group of lads went there, liked the beer and put it up on facebook for their friends. That’s the potential of social media for smaller brands.”
No more MOR
“Premium brands are growing alongside the value brands,” she points out, “It’s the mid-brands that are shrinking, the medium-priced OK quality brands. The correlation between these and the off-trade is that the independent specialist off-licences will do well and will grow. The ‘value value’ brands in Aldi and Lidl will grow their end but the middle ground in the off-trade has started to suffer for being neither one nor the other.
“Convenience will always play a big part but without convenience, price or specialism, where’s the advantage? Why is the consumer going to buy from you?
“That correlates directly with the brand squeeze on the ‘Middle Of the Road neither-here-nor-there brands’.”
To her mind, independents should continue on the specialisation and exclusivity road.
“Then you’ve got the likes of Musgraves where I think they’re foreseeing a lot of this and being quite clever with their repertoire, not wanting to be caught between two stools.
So with Supervalu and Musgraves, through its buying power it’s developing that repertoire of exclusive brands, exclusive deals and I think that’s where symbol groups could be in danger of becoming MOR. They need to apply these sorts of strategies so that they don’t get left behind.
“You have to set out your stall to be clearly one thing or the other,” believes a MOR-shunning Charley Stoney, “People don’t have time to puzzle out where the establishment is at, but need a clear definition of this at the outset of their visit.”